This deal is like teeter-totter: it's looking good, it's not looking good, it's looking good, it's not looking good. Gosh, this is all so dramatic.
Washington - Seventy-two members of Congress expressed opposition to the merger of Sirius and XM in a letter to the Justice Department, the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC).
The six paragraph letter stated the merger of Sirius and XM would create a monopoly that would harm consumers and in it they claimed there is “scant evidence” that a merger would produce any cost savings to subscribers.
XM, Sirius and even Wall Street analysts have asserted the merger would create a savings of $3 billion to $7 billion for the companies. Sirius CEO Mel Karmazin, in testimony before Congress, has said the savings would be passed on to consumers in the form of lower prices and increased programming.
The six paragraph letter stated the merger of Sirius and XM would create a monopoly that would harm consumers and in it they claimed there is “scant evidence” that a merger would produce any cost savings to subscribers.
XM, Sirius and even Wall Street analysts have asserted the merger would create a savings of $3 billion to $7 billion for the companies. Sirius CEO Mel Karmazin, in testimony before Congress, has said the savings would be passed on to consumers in the form of lower prices and increased programming.
The lesson here is not that analysts scoff at Mel Karmazin's convenient fiction that a combined entity would cost consumers less, it's that both companies need to seriously increase their political campaign contributions if they want Congress to smile on the proposed deal.
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1 comment:
I do some consulting with the NAB on the proposed merger and I too question Karmazin's predictions. There will surely be hidden costs and confusion as XM and Sirius attempt to merge two business philosophies and two different technologies which have never been interoperable.
According to the engineering firm of Meintel, Sgrignoli & Wallace (MSW), a merger between XM and Sirius would not allow existing satellite radio customers to have access to more programs than they have now without buying a new satellite radio. Also, the two satellite systems cannot be expanded to fit in more channels beyond their current level without incurring loss of audio quality so much for better programming choices.
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